(1) Adjusted net income (loss) and adjusted income (loss) per share
exclude the impact of items related to its litigation with Google, Inc.,
restructuring costs as well as all adjustments related to recording the
non-cash tax valuation allowance for deferred tax assets. Adjusted net
income (loss) for prior periods has been revised to conform to current
definition.

(2) Adjusted EBITDA is GAAP net income (loss) plus interest income and
expense, income tax benefit and expense, depreciation, amortization and
stock-based compensation expenses. Adjusted EBITDA excludes any items
related to the litigation with Google Inc., and restructuring costs.
Adjusted EBITDA for prior periods has been revised to conform to current
definition.

Definitions and reconciliations for all non-GAAP measures are provided
in this press release.

Steve Swad, President and Chief Executive Officer of Rosetta Stone,
said, “I am very pleased with how Rosetta Stone performed in 2012. Early
in the year we set the strategy and since then we have been executing at
a pace that meets or exceeds our expectations. The business transitioned
during the year as we shifted the focus of the business to more online
and digital, growing our consumer Online Learner base 157% to over
68,000 and launching a digital downloadable version of our product on
our website. We also utilized new partners to expand distribution and
increased our social and mobile engagement.” Swad continued, “As we move
through 2013, we have more opportunities ahead of us and we plan to
invest further in product development to capitalize on these
opportunities and deliver new and innovative products to our customers.”

Fourth Quarter and Full Year 2012 Operational and Financial Highlights

Bookings: Total bookings decreased less than 1% in the fourth
quarter year-over-year to $84.3 million as 5% growth in the North
American Consumer segment (“NA Consumer”) and 6% growth in the
Institutional segment were offset by a $4.1MM decrease from the Rest
of World Consumer segment (“ROW Consumer”). Full year 2012 bookings
increased 4%, reflecting 14% growth in NA Consumer and 4% growth in
Institutional, offset by a 24% decrease in ROW Consumer. Growth in NA
Consumer for the quarter and the year reflects increases in Product
Unit sales and Paid Online Learners as the Company leveraged new
partners and increased online and digital sales. Decreases in ROW
Consumer bookings reflected weakness in Japan and the absence of
Product Unit sales in Germany compared with a year-ago.

Revenue: Consolidated revenue decreased 2% in the fourth
quarter year-over-year to $78.7 million from $80.5 million a year ago.
NA Consumer revenue decreased less than 1% reflecting both the shift
to Online Learner sales and lower average selling price for Product
Units. ROW Consumer revenue decreased 21% due to ongoing softness in
Japan and the absence of Product Unit sales in Germany reflecting the
shift to an online-only business. Both NA and ROW Consumer segment
revenue were impacted by a rationalization of our kiosk channel.
Institutional revenue increased 8% in the fourth quarter where
strength in the Corporate and International verticals offset softness
in K-12. Full year 2012 revenue increased 2% representing 10% growth
in NA Consumer, partially offset by a 20% decline in ROW Consumer and
a slight decrease in Institutional. The Institutional business was
impacted by the non-renewal of the Army and Marines contracts in 2011,
which impacted revenue in each of the first three quarters of 2012 and
was partially offset by increases in Corporate, International and
Emerging Markets.

US$ thousands

Three Months Ended

Twelve Months Ended

December 31,

December 31,

December 31,

December 31,

2012

2011

% change

2012

2011

% change

Revenue from:

North America Consumer

$52,946

$53,184

0%

$172,826

$157,561

10%

Rest of World Consumer

10,088

12,848

-21%

40,248

50,465

-20%

Total Consumer

63,034

66,032

-5%

213,074

208,026

2%

Institutional

15,667

14,494

8%

60,167

60,423

0%

Total

78,701

80,526

-2%

273,241

268,449

2%

Adjusted EBITDA: Adjusted EBITDA for the fourth quarter was
$9.1 million, a 29% increase versus $7.1 million in the fourth quarter
of 2011. The improvement in Adjusted EBITDA was due to lower operating
expenses that offset the decline in fourth quarter revenue. Cost of
Goods Sold decreased $1.9 million due to lower hard-product box costs
and a shift to online offerings. Sales and marketing expenses and
general and administrative (G&A) expenses also both decreased by $1.6
million and $1.8 million, respectively, on a normalized basis after
adjusting the fourth quarter of 2011 for stock-compensation expense
related to the cancellation of the Company's Long Term Incentive Plan
(“LTIP”) in that period. For the full year 2012, Adjusted EBITDA
increased $19.9 million to $13.8 million from negative $6.1 million in
2011. The improvement in Adjusted EBITDA primarily reflects 2% revenue
growth combined with a $9.2 million reduction in sales & marketing
expenses and a $3.5 million decrease in G&A expenses, on a normalized
basis, as the company improved its selling and marketing efficiency
and better leveraged its fixed operating structure. Improvements in
sales and marketing were mainly due to reducing the company's kiosk
footprint and more effectively managing media spend, particularly in
ROW Consumer.

Adjusted Net Income and Adjusted EPS: Rosetta Stone recorded
Adjusted Net Income of $3.4 million in the fourth quarter 2012,
compared to Adjusted Net Loss of $1.5 million in the fourth quarter of
2011. Adjusted Net Income per share was $0.15 compared to an Adjusted
Net Loss of $0.07 per share in the prior year period. For full year
2012, Rosetta Stone recorded Adjusted Net Loss of $1.3 million,
compared to Adjusted Net Loss of $16.4 million for the full year 2011.
Full year 2012 Adjusted Net Loss per share was $0.06 compared to an
Adjusted Net Loss of $0.79 per share in the prior year period Adjusted
Net Income and Adjusted EPS.

Balance Sheet and Cash Flow: Cash, cash equivalents and
short-term investments increased $22.2 million to $148.3 million at
December 31, 2012 from $126.1 million at September 30, 2012, and
increased $32.0 million compared with $116.3 million at December 31,
2011. The company has no debt. Free cash flow in the fourth quarter
was $22.2 million compared with $5.4 million a year ago. For the full
year 2012, free cash flow was $30.7 million compared with ($6.6)
million for 2011. Capital expenditures were $4.2 million for 2012
compared with $9.9 million for 2011. The fourth quarter cash flow from
operations included $8.0 million in cash tax refunds.

Financial Outlook

The company is providing the following guidance for the full year 2013:

2013 Guidance

Range

($ Millions)

Low

High

Revenue

$280

$290

Growth rate from 2012

2%

6%

Adjusted EBITDA

$16

$18

Growth rate from 2012

16%

30%

Adjusted Net Income

($1)

$1

Growth rate from 2012

66%

134%

Adjusted EPS

($0.02)

$0.04

Growth rate from 2012

87%

127%

Shares Outstanding (MM)

21.5

21.5

Capital Expenditures

$5

$8

Non-GAAP Financial Measures

This press release contains several non-GAAP financial measures.

Adjusted EBITDA is GAAP net income or loss plus interest income and
expense, income tax benefit and expense, depreciation, amortization and
stock-based compensation expenses. Adjusted EBITDA excludes any items
related to the litigation with Google Inc., restructuring costs and
transaction and other costs associated with mergers and acquisitions.
Adjusted EBITDA for prior periods has been revised to conform to current
definition.

Adjusted net income (loss) and adjusted net income (loss) per share
exclude the impact of items related to its litigation with Google, Inc.,
restructuring costs and transaction and other costs associated with
mergers and acquisitions as well as all adjustments related to recording
the non-cash tax valuation allowance for deferred tax assets.

Free cash flow is cash flow from operations less cash used in purchases
of property and equipment.

Bookings represent executed sales contracts received by the Company that
are either recorded immediately as revenue or as deferred revenue.

Management believes that these non-GAAP measures of financial results
provide useful information to investors regarding certain financial and
business trends relating to the Company's financial condition and
results of operations. Management uses these non-GAAP measures to
compare the Company's performance to that of prior periods for trend
analyses, for purposes of determining executive incentive compensation,
and for budgeting and planning purposes. These measures are used in
monthly financial reports prepared for management and in quarterly
financial reports presented to the Company's board of directors.
Management believes that the use of these non-GAAP financial measures
provides an additional tool for investors to use in evaluating ongoing
operating results and trends and in comparing the Company's financial
measures with other software companies, many of which present similar
non-GAAP financial measures to investors.

Management typically excludes the amounts described above when
evaluating the Company's operating performance and believes that the
resulting non-GAAP measures are useful to investors and financial
analysts in assessing the Company's operating performance due to the
following factors:

Amortization of Acquired Intangibles. Amortization costs and
the related tax effects are fixed at the time of an acquisition, and
then amortized over a period of several years after the acquisition
and generally cannot be changed or influenced by management after the
acquisition.

Stock-based Compensation. Although stock-based compensation is
an important aspect of compensation of the Company's employees and
executives, stock-based compensation expense is generally fixed at the
time of grant, then amortized over a period of several years after the
grant of the stock-based instrument, and generally cannot be changed
or influenced by management after the grant. In addition, the impact
of shares granted under these plans is considered in the Company's EPS
calculation to the extent the shares are dilutive.

Bookings. Although revenue is an important aspect of measuring
Company performance, the Company believes total sales bookings can be
a valuable indicator of the Company's performance. The Company is
transitioning to a greater amount of subscription sales, which results
in an increasing portion of sales being recorded as deferred revenue.

Management does not consider these non-GAAP measures in isolation or as
an alternative to financial measures determined in accordance with GAAP.
The principal limitation of these non-GAAP financial measures is that
they exclude significant expenses and income that are required by GAAP
to be recorded in the Company's financial statements. In addition, they
are subject to inherent limitations, because they reflect the exercise
of judgments by management about which expenses and items of income are
excluded from these non-GAAP financial measures and may not be
calculated in the same manner as other companies' similarly titled
non-GAAP measures.

In order to compensate for these limitations, management presents its
non-GAAP financial measures in connection with its GAAP results. The
company urges investors to review the reconciliation of its non-GAAP
financial measures to the comparable GAAP financial measures, which it
includes in press releases announcing earnings information, including
this press release, and not to rely on any single financial measure to
evaluate the company's business.

Reconciliation tables of the most comparable GAAP financial measures to
the non-GAAP measures used in this press release are included at the end
of this release.

Investor Webcast

This news release and the accompanying tables should be read in
conjunction with the additional content that is available on the
company's website.

In conjunction with this announcement, Rosetta Stone will host a webcast
today at 4:30 p.m. eastern time (ET) to discuss the results and the
company's business outlook. The webcast will be available live on the
Investor Relations page of the company's website at http://investors.rosettastone.com.

Investors may also dial in to the conference line using one of the
following numbers:

1-877-407-9039 (toll-free) or

1-201-689-8470 (toll/international)

A recorded replay of the webcast will be available on the “Investor
Relations” page of the company's web site http://investors.rosettastone.com
after the live discussion. The replay will also be available beginning
at 7:30PM ET until March 14, 2013 via telephone at the following numbers:

1-877-870-5176 (toll-free) or

1-858-384-5517 (toll/international)

Pass Code: 409560

About Rosetta Stone

Rosetta Stone Inc. provides cutting-edge interactive technology that is
changing the way the world learns languages. The company's proprietary
learning techniques—acclaimed for their power to unlock the natural
language-learning ability in everyone—are used by schools, businesses,
government organizations and millions of individuals around the world.
Rosetta Stone offers courses in over 30 languages, from the most
commonly spoken (like English, Spanish and Mandarin) to the less
prominent (including Swahili, Swedish and Tagalog). The company was
founded in 1992 on the core beliefs that learning to speak a language
should be a natural and instinctive process, and that interactive
technology can activate the language immersion method powerfully for
learners of any age. Rosetta Stone is based in Arlington, VA., and has
offices in Harrisonburg, VA, Boulder, CO, Tokyo, Seoul, London, and Sao
Paulo.

“Rosetta Stone” is a registered trademark or trademark of Rosetta Stone
Ltd. in the United States and other countries.

Cautionary Statement Regarding Forward-Looking Statements

Certain statements in this press release are forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of
1995, including our guidance for future financial performance and
operating targets, and our long-term growth prospects. In this context,
forward-looking statements often address our expected future business
and financial performance, and often contain words such as “project,”
“believe,” “plan,” “expect,” “anticipate,” “estimate,” “intend,”
“should,” “would,” “could,” “potentially,” “seek,” “may,” “likely,”
“will,” “financial outlook,” “guidance,” “strategy,” or “continue.”
These forward-looking statements reflect the company's current views
with respect to future events and are subject to certain risks,
uncertainties, and assumptions. A number of important factors could
cause actual results or events to differ materially from those indicated
by such forward-looking statements, including demand for language
learning solutions; the advantages of our products, services,
technology, brand and business model as compared to others; our
strategic focus; our ability to maintain effective internal controls or
to remediate material weaknesses; our cash needs and expectations
regarding cash flow from operations; our product development plans; the
appeal and efficacy of our products and services; our expectations
regarding capturing lifetime value and a broader range of market
segments through such offerings; our plans regarding expansion of our
marketing initiatives and sales force; our international operations and
growth plans; our plans regarding our kiosks and retail relationships;
our plans regarding our Institutional business; the impact of any
revisions to our pricing strategy; our ability to manage and grow our
business and execute our business strategy; our financial performance;
our actions to realigning our cost structure and revitalizing our
go-to-market strategy; our plans to transition our distribution to more
online in the Consumer segment; adverse trends in general economic
conditions and the other factors described more fully in the company's
filings with the U.S. Securities and Exchange Commission (SEC),
including the company's annual report on Form 10-K for the fiscal year
ended December 31, 2011, which is on file with the SEC. The company
assumes no obligation to update the information in this communication,
except as otherwise required by law. Readers are cautioned not to place
undue reliance on these forward-looking statements that speak only as of
the date hereof.

ROSETTA STONE INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(unaudited)

Three Months Ended

Twelve Months Ended

December 31,

December 31,

2012

2011

2012

2011

Revenue:

Product

$

53,384

$

60,841

$

180,919

$

195,382

Subscription and service

25,317

19,686

92,322

73,067

Total revenue

78,701

80,527

273,241

268,449

Cost of revenue:

Cost of product revenue

9,596

11,067

33,684

36,497

Cost of subscription and service revenue

3,335

3,758

15,226

12,619

Total cost of revenue

12,931

14,825

48,910

49,116

Gross profit

65,770

65,702

224,331

219,333

Operating expenses

Sales and marketing

41,005

43,316

151,646

161,491

Research and development

5,510

6,389

23,453

24,218

General and administrative

14,211

19,300

55,262

62,031

Total operating expenses

60,726

69,005

230,361

247,740

Income (loss) from operations

5,044

(3,303

)

(6,030

)

(28,407

)

Other income and (expense):

Interest income

46

78

187

302

Interest expense

-

0

-

(5

)

Other income (expense)

74

60

3

142

Total other income (expense)

120

138

190

439

Net income (loss) before income taxes

5,164

(3,165

)

(5,840

)

(27,968

)

Income tax expense (benefit)

1,158

1,814

29,991

(7,980

)

Net income (loss)

$

4,006

$

(4,979

)

$

(35,831

)

$

(19,988

)

Net income (loss) per share:

Basic

$

0.19

$

(0.24

)

$

(1.70

)

$

(0.96

)

Diluted

$

0.18

$

(0.24

)

$

(1.70

)

$

(0.96

)

Common shares and equivalents outstanding:

Basic weighted average shares

21,166

20,920

21,045

20,773

Diluted weighted average shares

21,828

20,920

21,045

20,773

ROSETTA STONE INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amounts)

(unaudited)

December 31,

December 31,

2012

2011

Assets

Current assets:

Cash and cash equivalents

$

148,190

$

106,516

Restricted cash

73

74

Short term investments

-

9,711

Accounts receivable (net of allowance for doubtful accounts of
$1,297 and $1,951, respectively)

Adjustments to reconcile net income (loss) to cash provided by
(used in) operating activities, net of business acquisitions

Stock-based compensation expense

1,801

7,376

8,009

12,353

Bad debt expense

485

519

1,820

1,228

Depreciation and amortization

1,847

2,285

8,077

8,724

Deferred income tax benefit

95

(1,768

)

27,035

(1,297

)

Loss on sales of equipment

31

300

783

318

Net change in:

Restricted cash

(14

)

(8

)

1

11

Accounts receivable

(10,840

)

(17,403

)

309

(5,058

)

Inventory

184

1,807

185

3,168

Prepaid expenses and other current assets

1,085

(712

)

1,870

659

Income tax receivable

8,595

6,420

6,515

(5,812

)

Other assets

303

183

225

(25

)

Accounts payable

(863

)

(1,185

)

(1,240

)

(447

)

Accrued compensation

3,617

2,662

5,093

1,200

Other current liabilities

7,325

7,691

635

3,979

Excess tax benefit from stock options exercised

-

-

-

(365

)

Other long-term liabilities

(55

)

(204

)

(99

)

(52

)

Deferred revenue

5,807

4,407

11,514

4,777

Net cash provided by (used in) operating activities

23,409

7,391

34,901

3,373

Cash Flows From Investing Activities:

Purchases of property and equipment

(1,248

)

(2,032

)

(4,187

)

(9,940

)

Proceeds from (purchases of) available-for-sale securities

-

(1,500

)

9,711

(3,301

)

Acquisition, net of cash acquired

-

-

-

(75

)

Net cash provided by (used in) investing activities

(1,248

)

(3,532

)

5,524

(13,316

)

Cash Flows From Financing Activities:

Proceeds from the exercise of stock options

32

161

862

800

Tax benefit of stock options exercised

-

-

-

365

Payments under capital lease obligations

(210

)

(279

)

(215

)

(285

)

Net cash provided by financing activities

(178

)

(118

)

647

880

Increase (decrease) in cash and cash equivalents

21,983

3,741

41,072

(9,063

)

Effect of exchange rate changes in cash and cash equivalents

161

(292

)

602

(177

)

Net increase (decrease) in cash and cash equivalents

22,144

3,449

41,674

(9,240

)

Cash and cash equivalents—beginning of period

126,046

103,067

106,516

115,756

Cash and cash equivalents—end of period

$

148,190

$

106,516

$

148,190

$

106,516

ROSETTA STONE INC.

Reconciliation of Net Income (Loss) to Adjusted EBITDA

(in thousands)

(unaudited)

Three Months Ended

Twelve Months Ended

December 31,

December 31,

2012

2011

2012

2011

Net income (loss)

$

4,006

$

(4,979

)

$

(35,831

)

$

(19,988

)

Interest (income)/expense, net

(46

)

(78

)

(187

)

(297

)

Income tax expense (benefit)

1,158

1,814

29,991

(7,980

)

Depreciation and amortization

1,847

2,285

8,077

8,724

Stock-based compensation

1,801

7,376

8,009

12,353

Other EBITDA Adjustments

360

655

3,752

1,098

Adjusted EBITDA*

$

9,126

$

7,073

$

13,811

$

(6,090

)

* Adjusted EBITDA is GAAP net income or loss plus interest income and
expense, income tax benefit and expense, depreciation, amortization and
stock-based compensation expenses. Adjusted EBITDA excludes any items
related to the litigation with Google Inc., restructuring costs and
transaction and other costs associated with mergers and acquisitions.
Adjusted EBITDA for prior periods has been revised to conform to current
definition.

ROSETTA STONE INC.

Reconciliation of GAAP net income (loss) before taxes to adjusted
net income (loss)

(in thousands, except per share amounts)

(unaudited)

Three Months Ended

Twelve Months Ended

December 31,

December 31,

2012

2011

2012

2011

GAAP Net income (loss)

$

4,006

$

(4,979

)

$

(35,831

)

$

(19,988

)

Items related to litigation with Google, Inc. restructuring and
other related costs

360

655

3,752

1,098

Income tax adjustments *

(996

)

2,793

30,805

2,499

Adjusted Net income (loss) **

$

3,370

$

(1,531

)

$

(1,274

)

$

(16,391

)

GAAP net income (loss) per share

$

0.19

$

(0.24

)

$

(1.70

)

$

(0.96

)

Items related to litigation with Google, Inc. restructuring and
other related costs

0.01

0.03

0.18

0.05

Income tax adjustments *

(0.05

)

0.14

1.46

0.12

Adjusted net income (loss) per share **

$

0.15

$

(0.07

)

$

(0.06

)

$

(0.79

)

Diluted weighted average shares

21,828

20,920

21,045

20,773

* For adjusted net income (loss) purposes, we use a 39% effective tax
rate which represents the projected, long term effective tax rate on
adjusted pretax income. Our adjusted tax rate assumes full use of loss
and credit carryforwards without reduction for valuation allowances.

** Adjusted net income (loss) and adjusted net income (loss) per share
exclude the impact of items related to its litigation with Google, Inc.,
restructuring costs and transaction and other costs associated with
mergers and acquisitions as well as all adjustments related to recording
the non-cash tax valuation allowance for deferred tax assets. Adjusted
net income (loss) for prior periods has been revised to conform to
current definition.

Rosetta Stone Inc.

Business Metrics

(in thousands)

Quarter-Ended

Quarter-Ended

Quarter-Ended

3/31/10

6/30/10

9/30/10

12/31/10

2010

3/31/11

6/30/11

9/30/11

12/31/11

2011

3/31/12

6/30/12

9/30/12

12/31/12

2012

Net Bookings by Market

North America Consumer

41,631

38,746

41,138

52,243

173,758

29,814

36,828

35,562

55,209

157,413

41,733

37,295

42,283

57,870

179,181

Rest of World Consumer

10,029

8,177

9,860

15,176

43,242

14,996

12,910

11,945

14,166

54,017

12,550

8,113

10,488

10,034

41,185

Worldwide Consumer

51,660

46,923

50,998

67,419

217,000

44,810

49,738

47,507

69,375

211,430

54,283

45,408

52,771

67,904

220,366

Worldwide Institutional

9,108

17,110

22,307

14,395

62,920

10,770

16,973

18,555

15,459

61,757

10,984

17,635

19,354

16,423

64,396

Total

60,768

64,033

73,305

81,814

279,920

55,580

66,711

66,062

84,834

273,187

65,267

63,043

72,125

84,327

284,762

YoY Growth (%)

North America Consumer

6%

-9%

-19%

-11%

-9%

-28%

-5%

-14%

6%

-9%

40%

1%

19%

5%

14%

Rest of World Consumer

304%

168%

135%

93%

146%

50%

58%

21%

-7%

25%

-16%

-37%

-12%

-29%

-24%

Worldwide Consumer

23%

3%

-7%

1%

4%

-13%

6%

-7%

3%

-3%

21%

-9%

11%

-2%

4%

Worldwide Institutional

8%

28%

5%

37%

18%

18%

-1%

-17%

7%

-2%

2%

4%

4%

6%

4%

Total

21%

9%

-4%

6%

7%

-9%

4%

-10%

4%

-2%

17%

-5%

9%

-1%

4%

% of Total Net Bookings

North America Consumer

69%

60%

56%

64%

62%

54%

55%

54%

65%

57%

64%

59%

59%

69%

63%

Rest of World Consumer

16%

13%

14%

18%

16%

27%

20%

18%

17%

20%

19%

13%

14%

12%

14%

Worldwide Consumer

85%

73%

70%

82%

78%

81%

75%

72%

82%

77%

83%

72%

73%

81%

77%

Worldwide Institutional

15%

27%

30%

18%

22%

19%

25%

28%

18%

23%

17%

28%

27%

19%

23%

Total

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

Revenue by Market

North America Consumer

41,407

38,748

36,902

44,516

161,573

28,061

38,606

37,710

53,184

157,561

43,084

36,918

39,878

52,946

172,826

Rest of World Consumer

9,815

7,651

9,708

15,516

42,690

14,601

12,014

11,002

12,848

50,465

12,204

8,053

9,903

10,088

40,248

Worldwide Consumer

51,222

46,399

46,610

60,032

204,263

42,662

50,620

48,712

66,032

208,026

55,288

44,971

49,781

63,034

213,074

Worldwide Institutional

11,792

14,249

14,316

14,248

54,605

14,316

16,123

15,490

14,494

60,423

14,161

15,841

14,498

15,667

60,167

Total

63,014

60,648

60,926

74,280

258,868

56,978

66,743

64,202

80,526

268,449

69,449

60,812

64,279

78,701

273,241

YoY Growth (%)

North America Consumer

5%

-8%

-28%

-25%

-16%

-32%

0%

2%

19%

-2%

54%

-4%

6%

0%

10%

Rest of World Consumer

297%

154%

137%

101%

147%

49%

57%

13%

-17%

18%

-16%

-33%

-10%

-21%

-20%

Worldwide Consumer

22%

3%

-16%

-10%

-2%

-17%

9%

5%

10%

2%

30%

-11%

2%

-5%

2%

Worldwide Institutional

39%

23%

21%

26%

26%

21%

13%

8%

2%

11%

-1%

-2%

-6%

8%

0%

Total

25%

7%

-9%

-5%

3%

-10%

10%

5%

8%

4%

22%

-9%

0%

-2%

2%

% of Total Revenue

North America Consumer

66%

64%

61%

60%

62%

49%

58%

59%

66%

58%

62%

61%

62%

67%

63%

Rest of World Consumer

15%

13%

16%

21%

17%

26%

18%

17%

16%

19%

18%

13%

15%

13%

15%

Worldwide Consumer

81%

77%

77%

81%

79%

75%

76%

76%

82%

77%

80%

74%

77%

80%

78%

Worldwide Institutional

19%

23%

23%

19%

21%

25%

24%

24%

18%

23%

20%

26%

23%

20%

22%

Total

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

Consumer Revenue by Channel

DTC

31,026

25,142

27,500

34,496

118,164

31,856

30,984

31,177

42,368

136,385

36,839

30,953

35,136

39,345

142,273

Kiosk

9,391

8,683

7,392

9,533

34,999

7,312

7,368

6,987

8,504

30,171

6,483

4,564

4,103

4,092

19,242

Global Retail

9,608

11,200

9,832

15,413

46,053

2,585

10,752

9,015

14,265

36,616

10,999

8,122

8,911

18,593

46,625

Home School

1,197

1,374

1,886

590

5,047

909

1,516

1,533

895

4,854

967

1,332

1,631

1,004

4,934

Total

51,222

46,399

46,610

60,032

204,263

42,662

50,620

48,712

66,032

208,026

55,288

44,971

49,781

63,034

213,074

YoY Growth (%)

DTC

24%

-5%

-6%

-2%

2%

3%

23%

13%

23%

15%

16%

0%

13%

-7%

4%

Kiosk

14%

-7%

-25%

-28%

-14%

-22%

-15%

-5%

-11%

-14%

-11%

-38%

-41%

-52%

-36%

Global Retail

34%

46%

-27%

-12%

0%

-73%

-4%

-8%

-7%

-20%

325%

-24%

-1%

30%

27%

Home School

-19%

-12%

-28%

-50%

-26%

-24%

10%

-19%

52%

-4%

6%

-12%

6%

12%

2%

Total

22%

3%

-16%

-10%

-2%

-17%

9%

5%

10%

2%

30%

-11%

2%

-5%

2%

% of Total Consumer Revenue

DTC

61%

54%

59%

57%

58%

75%

61%

64%

64%

66%

66%

69%

71%

62%

67%

Kiosk

18%

19%

16%

16%

17%

17%

15%

14%

13%

15%

12%

10%

8%

6%

9%

Global Retail

19%

24%

21%

26%

23%

6%

21%

19%

22%

17%

20%

18%

18%

30%

22%

Home School

2%

3%

4%

1%

2%

2%

3%

3%

1%

2%

2%

3%

3%

2%

2%

Total

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

Unit Metrics

Product Unit Volume (thousands)

126.3

112.9

117.6

169.7

526.5

108.5

140.0

134.3

202.9

585.8

143.0

129.7

146.5

210.7

629.8

Paid Online Learners (thousands)

12.6

14.2

17.7

16.8

16.8

16.4

17.1

21.5

26.6

26.6

41.2

48.7

57.4

68.4

68.4

YoY Growth (%)

Product Units

-14%

24%

14%

20%

11%

32%

-7%

9%

4%

8%

Paid Online Learners

30%

20%

21%

58%

58%

151%

185%

167%

157%

157%

Average Net Revenue Per Unit ($)

Average Net Revenue per Product Unit

$395

$398

$382

$343

$376

$379

$349

$346

$313

$341

$367

$319

$313

$277

$315

Average Net Revenue per Online Learner (monthly)

$33

$35

$35

$35

$35

$30

$34

$39

$36

$35

$28

$27

$24

$24

$26

YoY Growth (%)

Average Net Revenue per Product Unit

-4%

-12%

-9%

-9%

-9%

-3%

-9%

-9%

-11%

-8%

Average Net Revenue per Online Learner

-10%

-2%

10%

3%

0%

-6%

-22%

-37%

-32%

-25%

# of Kiosks (end of period)

North America

190

186

180

173

173

144

117

114

103

103

57

56

57

57

57

Europe

9

10

13

15

15

15

16

14

13

13

1

1

1

1

1

Asia Pacific

41

50

64

71

71

78

76

69

58

58

44

42

39

29

29

Total # of Kiosks (end of period)

240

246

257

259

259

237

209

197

174

174

102

99

97

87

87

Revenues by Geography

United States

52,476

52,139

50,390

57,624

212,629

41,271

53,418

51,708

65,725

212,122

54,914

50,810

52,167

65,856

223,747

International

10,538

8,509

10,536

16,656

46,239

15,707

13,325

12,494

14,801

56,327

14,535

10,002

12,112

12,845

49,494

Total

63,014

60,648

60,926

74,280

258,868

56,978

66,743

64,202

80,526

268,449

69,449

60,812

64,279

78,701

273,241

Revenues by Geography (as a %)

United States

83%

86%

83%

78%

82%

72%

80%

81%

82%

79%

79%

84%

81%

84%

82%

International

17%

14%

17%

22%

18%

28%

20%

19%

18%

21%

21%

16%

19%

16%

18%

Total

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

Prior period data has been modified where applicable to conform to
current presentation for comparative purposes.

Immaterial rounding differences may be present in this data in order
to conform to Financial Statement totals.